Taxing the rich polls well. Getting it done is another story. But Massachusetts voters did just that, voting 52% to 48% to pass an amendment to the state’s constitution to tax income over $1 million per year by an additional 4%. To this point, Massachusetts has had a flat 5% income tax, meaning that multimillionaires pay the same rate as fast food workers. Now taxes won’t be going up for factory workers or teachers or programmers or doctors or the overwhelming majority of lawyers. Even most CEOs in the state won’t pay since the median CEO earns less than $250,000. But the top 0.6% of earners in the state—some 21,000 of them—will pay a little bit more on some of their income.
At $1,000,001 in income, you’d pay an extra 4 cents. At $2 million in income, you’d pay an extra $40,000. (Out of your $2 million in income, so cry me a river.)
The Fair Share Amendment, as it’s called, drew predictable opposition from the very same rich people who will be paying four cents more out of every dollar they earn over $1 million each year. New England Patriots owner Robert Kraft gave $1 million to stop the measure from passing, as did New Balance Chairman Jim Davis. A series of other investment firms, real estate companies, construction companies, and pharmaceutical executives gave anywhere from $25,000 to $1 million apiece.
The ability to contribute $1 million to an effort to tax the wealthy seems like evidence that the wealthy should be taxed more.
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The money from the new tax, some $2 billion a year, will be dedicated to transportation and education. That means improving public transit across the state, fixing the state’s nearly 500 structurally deficient bridges, repaving roads, and fully funding schools. It means expanding pre-K programs and vocational schools that currently don't have room for everyone who wants to attend. Massachusetts will be able to do so much with this money.
But as the 48% of people who voted against a tax that will only ever be paid for even one year by 0.7% of people show, there are plenty of people out there who will stand up for multimillionaires and billionaires.
The biggest group making a fuss on social media are concern trolls just worried that this means the state will lose out because all the wealthy people will leave.
In fact, sociologist Cristobal Young has studied this issue in depth, finding in one study (coauthored with Charles Varner, Ithai Z. Lurie, and Richard Prisinzano) that “a 10 percent increase in the top tax rate leads to a 1 percent loss of the millionaire population.” Another study by Young and Varner looked at the tax flight outcome after New Jersey passed a millionaire tax, once again finding very small effects confined largely to retired millionaires, millionaires living on investments, and millionaires who both live and work in the same state. Young and Lurie have also looked at the outcomes of the 2017 Republican tax law. Here’s why that law might have created millionaire tax flight from blue states:
But:
Sure, it’s possible to find occasional examples, but the idea that large numbers of rich people are going to pack up and flee is a myth.
Fearmongering about home sales was another of the major angles opponents of the Fair Share Amendment pushed. Because what if you sell your house and suddenly get hit with an extra tax? Well, if that happened, it was because you sold your house for well over $1 million more than you paid for it to begin with, because only the gain would be eligible for taxation. In fact, people selling their primary residence would also get to deduct $500,000, so only the amount over the first $1.5 million of the sale past what they originally paid for the house would be taxed by that extra 4%. Oh, and add in any major renovations they did—the cost of that new roof or renovated kitchen would also be deductible. That’s why, even in a state with expensive housing, less than 1% of home sales would be affected. That’s not stopping people from pushing those claims, though:
Look, if that “blue collar family” that had the money to buy a three-family unit in 1992 saw well over $1 million in growth on their investment, they’re going to be fine! Because they’re getting that first million over what they paid in 1992 with no added tax. Plus they’ve presumably spent 30 years collecting rent on two of those units, or else housing their relatives for free.
Then there’s this old chestnut:
Let me fix that for you: “Small business owners making more than $1 million of personal income a year, farmers making more than $1 million a year, and fishermen making more than $1 million a year.”
Massachusetts activists are absolutely going to have to hold our legislature accountable for how this money is spent, specifically. What transportation projects? Which schools? But while the fight continues to build a more equitable commonwealth with stronger education and infrastructure, this first win was essential.
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